Mr Tarlton (Economists Dept)
COTTON YARN
1.
Cotton yarn is on the Community's Common Liberalisation List
which we were committed to accept from April 1973. From this date we liberalised imports from the Mediterranean Associates and the Community granted us authority to maintain restraints on other low cost suppliers until the end of this year. The question now asked is should we ask the EEC to allow us ? to continue restraints on these other countries. I attach a copy of a draft submission by Chemicals and Textiles Division of the DTI in which they support the view of the British Textile Confederation (see their paper also attached) that restraints should be maintained until the end of 1976 in order to give industry time to invest and build up production to a competitive level.
2.
It is true, as the CT paper says, that industry has come a long way from their call of a few years ago for complete protection for the cotton spinning industry but by their own admission the present call for continued restraint falls short of the criterion which would be required for the imposition of any new restraint arrangements. In fact, yarn is one of the few textile areas where Community imports are genamely liberalised and even allowing for this EEC import penetration is still only 13%, roughly the same as ours. Removal of the quotas would still, in the industry's view, leave UK suppliers with 72% of the domestic market in 1975 and would result in the loss of only 700 jobs.
3. In my view it does not seem that the arguments put forward by industry or by CT Division are tenable. I should welcome your views.
4. SAD and HKIOD will see that CT Division are particularly concerned with the liberalisation of imports from India, Pakistan and Hong Kong. These three countries would be likely to continue their export efforts mainly to the UK market with a tendency to ignore other EEC countries. Pakistan is undoubtedly very competitive. While India is generally inefficient in the production of couton cloth, I believe she is still good on yarn. Their present quoti is fully taken up and there is no reason to believe inus they woula not De vie to incrC. DE their exports if they were allowed tc. HORE hong claime that she is gen any now unu ? sold, part chyby rakistai,
it seems
Ja 897465 40um
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